If Bumble Roofing accepts the defense of a trademark claim, does it have the right to settle the claim?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
The Minnesota Department of Commerce requires that a franchisor indemnify Minnesota Franchisees against liability to third parties resulting from claims by third parties that the franchisee's use of the franchisor's trademark infringes upon the trademark rights of the third party. The franchisor does not indemnify against the consequences of a franchisee's use of a franchisor's trademark except in accordance with the requirements of the franchise agreement, and as the condition to an indemnification, the franchisee must provide notice to the franchisor of any such claim immediately and tender the defense of the claim to the franchisor. If the franchisor accepts tender of defense, the franchisor has the right to manage the defense of the claim, including the right to compromise, settle or otherwise resolve the claim, or to determine whether to appeal a final determination of the claim.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 43–45)
What This Means (2025 FDD)
According to Bumble Roofing's 2025 Franchise Disclosure Document, specifically the Minnesota addendum, if Bumble Roofing accepts the defense of a trademark infringement claim against a Minnesota franchisee, it retains the right to manage the defense. This includes the authority to compromise, settle, or otherwise resolve the claim. Bumble Roofing also has the discretion to decide whether or not to appeal any final determination related to the claim.
This stipulation is tied to the requirement that the franchisee must immediately notify Bumble Roofing of any trademark infringement claim and formally tender the defense of the claim to them. This means the franchisee must hand over control of the legal defense to Bumble Roofing. The FDD clarifies that Bumble Roofing's obligation to indemnify and manage the defense arises specifically from claims that the franchisee's use of Bumble Roofing's trademarks infringes upon a third party's trademark rights.
For a prospective Bumble Roofing franchisee in Minnesota, this is a notable benefit. It means that if they are sued for trademark infringement related to their use of the Bumble Roofing brand, Bumble Roofing will step in to handle the legal complexities and financial burden of the defense, including potential settlement costs. However, it's crucial for the franchisee to promptly report any such claims and allow Bumble Roofing to take over the defense to ensure this protection applies. This clause provides a degree of security, but strict adherence to the notification and tender requirements is essential to activate Bumble Roofing's responsibility.
It's important to note that this protection is specifically tied to Minnesota franchisees and their use of Bumble Roofing's trademarks. Franchisees in other states may have different terms based on their state-specific addenda. Additionally, the franchisee is still expected to use the trademarks according to Bumble Roofing's standards to be eligible for indemnification.